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Public Statements

Letter To The Honorable Edward Kennedy, Chairman, Senate Committee On Health, Education, Labor, and Pensions and Max Baucus, Chairman, Senate Committee On Finance

As Congress prepares to pass a budget that includes funding for health care reform, 16 U.S. Senators today outlined how reform with a public plan option could lower health costs, improve quality of care, and ensure access in rural and other underserved areas. The need for the inclusion of a public plan option in comprehensive health reform was outlined in a letter sent today to key committee chairmen from members of Senate leadership, leaders on health care, and members of key committees. The letter was signed by U.S. Sens. Sherrod Brown (D-OH), John D. (Jay) Rockefeller (D-WV), Dick Durbin (D-IL), Charles E. Schumer (D-NY), Tom Harkin (D-IA), Daniel K. Inouye (D-HI), Carl Levin (D-MI), Jack Reed (D-RI), Debbie Stabenow (D-MI), Bernie Sanders (I-VT), Bob Casey (D-PA), Jim Webb (D-VA), Sheldon Whitehouse (D-RI), Jeff Merkley (D-OR), Ted Kaufman (D-DE), and Kirsten Gillibrand (D-NY). A full copy of the letter can be found here.
"As we take steps to make coverage more affordable and accessible, we must heed past experience that private insurance alone cannot accomplish our goals," wrote the senators today in a letter to Senate Health, Education, Labor and Pensions Committee Chairman Edward Kennedy (D-MA) and Finance Committee Chairman Max Baucus (D-MT). "To achieve meaningful reform, insurers must compete based on quality and affordability - but clearly that has not always been the case. Indeed, history suggests that the insurance industry will build a business model at least in part around pushing government subsidies upward. A public option that sets the standard for quality, efficiency, and cost will create incentives for healthy competition that will serve the interests of all Americans."

Health reform is expected to give Americans the choice between keeping their employer-sponsored health insurance or obtaining health coverage through a menu of competing plans. The senators outlined the need for a public health insurance plan option to be included in this reform as a way of keeping HMO costs in-line and ensuring health insurance access in all parts of the country. The senators emphasized that the inclusion of a public health plan option would bring much-needed competition to the private insurance market while containing costs, improving access, and setting a standard for efficiency, quality, and affordability.

Currently, the U.S. relies on a private insurance system for most working-aged individuals and families. Under this system, more than 46 million Americans are uninsured, and an additional 25 million Americans are underinsured— living with health insurance that does not adequately protect them from catastrophic health care expenses.

The senators outlined how the inclusion of a public health plan could improve access and affordability. Consumers Union found that 30 percent of the underinsured had out-of-pocket costs of $3,000 or more for a single year, and a Health Affairs study found that one quarter of underinsured people have deductibles of $1,000 or more. It is estimated that half of all personal bankruptcies are caused in part by unpaid medical bills or illness. A public plan option would set a standard for coverage and affordability—and would encourage private insurers to follow suit, by offering more services and limiting out-of-pocket costs like high deductibles and large co-payments.

Because a public health plan would have limited overhead and advertising costs, it would also set a new standard for efficiency and cost savings while bringing much-need competition to the health insurance market. According to a 2004 study, in only three U.S. states do the largest private health insurance plans control less than 50 percent of total enrollment—in only 14 U.S. states do the largest plans control less than 65 percent. In the private individual insurance market, more than 40 percent of claims are spent on administration, and in the small group market, that figure is nearly 30 percent. Medicare, the federal program providing health coverage to American seniors, spends only 5 percent on administrative costs.

Additionally, a public health plan option would lower health care costs and improve the competitiveness of U.S. businesses. Since existing employer-sponsored health coverage depends on private health insurers, health costs are high and affect competitiveness. The average employer spent $7,173 per employee for health care in 2008 and paid an average of 20 percent of total medical premium costs for workers in 2008. Depending on how the public plan option is designed, savings could total between $750 billion and $2.2 trillion over eleven years.

A full copy of the senators' letter can be found below:

April 29, 2009

The Honorable Edward Kennedy The Honorable Max Baucus
Chairman, Senate Committee on Health, Chairman, Senate Committee on
Education, Labor, and Pensions Finance
428 Dirksen Senate Office Building 219 Dirksen Senate Office Building
Washington, DC 20510 Washington, DC 20510

Dear Chairman Kennedy and Chairman Baucus:

Thank you for your leadership on efforts to bring long overdue reform to our health care system. As you both have often pointed out, rising health care costs are overwhelming family, business, and government resources and jeopardizing both the economic future of our nation and the health of our citizens. With millions of Americans uninsured or underinsured, with our businesses struggling to compete globally due to burdensome health costs, and with our nation spending in excess of two trillion dollars annually on health care, there is clear and widespread consensus that our health care system is in need of reform.

As members of key committees and leaders on health care issues, we write to support a public plan option as a core component of this reform. There is no reason to believe that private insurers alone will meet the public purpose of ensuring coverage for all Americans at an affordable price for taxpayers.

Medicare Part D should serve as one particularly pertinent reminder of how well-intentioned efforts to address serious health care problems - if not done with the best interests of patients in mind - can end up working better for the pharmaceutical and insurance industries than for beneficiaries. There is no public plan alternative to the private drug plans available under Medicare Part D, and Medicare is prohibited by law from negotiating bulk drug discounts on behalf of Medicare beneficiaries. As a result, the cost to taxpayers has been 3.5 times the market value of the prescriptions covered by Part D plans, according to a study in the peer-reviewed journal, Health Affairs. The stated intent of the legislation was to bring affordable drug coverage to Medicare beneficiaries, but the result was the creation of a privately run program that has hiked up drug prices at the expense of patients and taxpayers, and left the dreaded "donut hole" to ensnare seniors.

As we take steps to make coverage more affordable and accessible, we must heed past experience that private insurance alone cannot accomplish our goals. To achieve meaningful reform, insurers must compete based on quality and affordability - but clearly that has not always been the case. Indeed, history suggests that the insurance industry will build a business model at least in part around pushing government subsidies upward. A public option that sets the standard for quality, efficiency, and cost will create incentives for healthy competition that will serve the interests of all Americans.

Insurance reform is positive. Insurance reform is essential. But insurance reform is only a piece of the health reform puzzle. We agree with President Obama's comments during his campaign: that the surefire way to guarantee affordable and meaningful coverage for all is by giving citizens a choice between private insurance and a public alternative. We envision a uniquely American solution: an insurance market that allows for healthy, fair, and robust competition between publicly-administered and privately-administered insurance, allowing those who are satisfied with their coverage to keep what they have. Let Americans choose which option is best for them.

An alternative to private insurance will help keep that industry honest, while providing a mechanism for advancing quality-enhancing and cost-cutting strategies essential to the future viability of our health care system. In addition, an alternative to private insurance can, and should, promote the kind of delivery reform that minimizes medical errors, deters duplicative and other unnecessary tests and treatments, advances the use of information technology and best practices to increase the efficiency and effectiveness of health care, and showcases successful strategies for preventing and managing catastrophic and chronic health conditions. Finally, an alternative to private insurance would ensure rural Americans, and those facing employment changes, the choice to have quality, affordable coverage backed by the strength and reliability of the federal government.

We understand that there are many ways to design a public insurance option for uninsured Americans, and we stand ready to work with you to design this option as part of overall health reform. Health reform must include checks and balances, including public and private insurance options for the Americans we serve. We agree with you that the needs of the American citizens must take precedence over special interest groups in this critical debate.

Thank you for your consideration. We would be glad to discuss our thoughts with you in more depth.

***What senators are saying about a public plan option in comprehensive health reform***

Senator Bernie Sanders (I-VT):

"The United States needs to join the industrialized world with a real national health care program that guarantees comprehensive health care to every man, woman, and child, and we save money as we do that."

Senator Sherrod Brown (D-OH):

"Comprehensive health reform is not only a moral issue—it's critical to getting our economy back on track. We can't achieve economic prosperity if families are only one hospital visit away from financial disaster or American businesses struggle to compete globally due to health care costs. We must preserve access to employer-sponsored health care while increasing competition in the private market. Unfortunately, HMOs and private insurers always seem to be one step ahead of the sheriff. Including a public health plan option will keep costs down while ensuring coverage is comprehensive and accessible."

Senator John D. (Jay) Rockefeller IV:

"A public plan option must be part of health care reform. We need to provide quality, affordable coverage for the millions of Americans the insurance industry has failed and a public plan is the only reliable way to do just that," said Senator Rockefeller, Chairman of the Senate Finance Subcommittee on Health Care. "The recent Ingenix issue and countless examples of unscrupulous insurance industry practices leave little reason to believe that private insurers alone will meet the public policy goal of providing affordable, accessible and stable health coverage to all Americans."

Senator Charles E. Schumer (D-NY):

"A public plan option in health care reform will serve as the ‘gold standard' for private insurance by providing an affordable choice for all Americans, covering all essential medical services and spurring innovative quality improvements across the public and private systems."

Senator Carl Levin (D-MI):

"Reforming our health care system must be a top priority both for the well-being of our citizens and for the vitality of our economy. An affordable public option that is open to every American will help ensure the health care system remains competitive, keep health care costs down, and most importantly provide for access to quality health care for all."

Senator Jack Reed (D-RI):

"Maintaining the coverage families already have and reducing health care costs are the hallmark of health care reform. A public plan offers an opportunity to make health care more affordable by creating competition for lower premiums - it will reduce administrative costs and leverage the bargaining power of consumers and the government."

Senator Debbie Stabenow (D-MI):

"In the greatest country in the world, health care should be a right, not a privilege," said Stabenow. "As the health care debate moves through Congress it is important to remember that by providing the American people with competitive choices for insurance coverage, we can save lives and cut costs in both the public and private sectors. We cannot continue to allow economic downturns destroy economic well being, along with the health of America's families. We must provide an affordable health care option."

Senator Jeff Merkley (D-OR):

"Oregon currently has the second-highest unemployment rate in the nation and tens of thousands of Oregon families are without health care," said Oregon's Senator Jeff Merkley. "The need for available, affordable health care has never been more important. A public option will put care in reach for families in my state and across the nation while encouraging innovation and efficiency in the private sector."

Senator Kirsten Gillibrand (D-NY):

"Ensuring that every American has access to quality, affordable health care is a national priority," said Senator Gillibrand. "With more than 47 million uninsured Americans and millions of families and businesses struggling with rising health care costs, the time to act is now. We cannot have a system in which the only choice is private plans. Everyone should have the option of buying into a not-for profit public plan at a rate that they can afford. I am proud to join with my colleagues to fight for the inclusion of a public plan option in health care reform."


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